My Mom is in NH receives royalties from land lease can I change this and will it affect her Medicaid application?

Pam - Vick can't change it, as it's seems by how he wrote his ? that in his late dad's will, it has as a benefit of his dads estates' asset (a land lease) is to go to his wife (Vick's mom) as a usufruct done by a royalty payment. It's in a will. If its a royalty lease, then the estate doesn't own it (the mineral) just whatever $ amount on the % passed through the leased land. The royalty dependent on current price for the mineral. And for more fun in all this, there is a difference between a royalty deed and a mineral deed. Royalty deeds do NOT actually transfer the mineral rights, but only a right to receive royalty from the mineral if & when it is produced. The grantor of the royalty retains the actual ownership of the minerals. I was executrix for an aunt who had O&G and it was impossible for me to figure all this out & I'm pretty OCD on stuff, we had a landman out of Houston to deal with it and it was expen$$ive & at the end the value was close to no value as they were only royalty on dead wells with long chains conveyance of titles. We're not talking Spindletop.

Production pays a royalty to the owner but this owner (Vick's dead dads estate) has that benefit given as a usufruct to the wife. She didn't inherit the lease, just has the benefit from the usufruct. What happens to the royalty once she dies will depend on (again) what is indicated in Dad's will.

If the royalty is small (which I bet it is as most are just a teeny tiny part of a field), she would just need to amortize the payment annually to determine what her monthly income is for Medicaid. Hopefully between the royalty, her SS and any other monthly income, she is under the maximum Medicaid amount allowed.
If it's a lot of $, then that is a whole other problem as mineral rights - as they change in value - probably cannot be done in a Miller trust for Medicaid.

My mom's annual renewal for TX Medicaid has a line for mineral rights payments specifically between the value of a funeral & burial policy ? and before reporting any dividend from insurance ?. So it's common enough at least for TX Medicaid to make it onto a routinely sent form. The royalty is kinda like how you would get a dividend on a paid up insurance policy and report it to Medicaid as income.

Vick - please check with the NH to see how they approach Medicaid. Most of the places in NOLA do not ever take Medicaid (St Anna's, Poydras, Lambeth - we looked for my late MIL). Now some of those on the wet bank do but you may find that mom needs to be private pay and placed on the Medicaid bed waiting list for 2 years. You want to clearly make sure that she will be able to stay in her current place and that they will take her as "Medicaid Pending" in 10 months. For my MIL, it took maybe 4 months to clear Medicaid and this was preKatrina. BTW the caseworker was pretty user-friendly for MIL's app.

LA law is very different in how it deals with family issues as it is based on French law. Usufructs pretty common especially for generationally owned property, vacation or 2nd homes or multi marriages. Until just recently, in LA you could NOT ever disinherit your kids in your will (all offspring too even those illegitimate). You have to have a LA license to do anything in the state too because of it's French law basis as all the other states & their law schools use English law. As another little nugget, usufruct's pretty common to way to do a little after death something for your mistress back in the day. In the lower Quarter and Marigny (old old neighborhoods) some of the been in the 'hood forever residents could point out houses that were usufructs to an octoroon or quadroon mistress.

Good answer? Holy cow, that's an outstanding answer from Igloo! I'm always amazed at the depth and breadth of knowledge and experience on this site!

Good answer igloo, but if Vick just decides to take it out of her name, I'm willing to bet Medicaid will impose a penalty on the whole darn thing without any amortization. That would be an ugly situation.

Vick - a usafruct? really! so are you in Louisiana? as we're the state that allows for all sorts of things to be done with usufruct. Couple of issues & you are going to need to go over all this in detail with an elder law attorney to make sure this is correct but….. if it's the case that O&G or mineral rights payment is from a usufruct then it is NOT your mom's asset. Usufrust means that she has the use or the benefit of the item - whether it's a 2nd home in Point Clear or a camp in Waveland or the royalty payment on the mineral rights - but she does NOT own it. She just has the use. Now you need to look over and then review with your attorney how the division of assets were set up in the will. I bet it's such that upon mom's death the usufruct lifts and then ownership passes to whomever in dad's will. They are the owner both now & in the future.

Perchance is mom a 2nd or 3rd wife? usufruct is often used for that situation as he can leave assets to children from first marriage but allows the 2nd/3rd wife and the kids from that marriage to continue to live in the lifestyle of their marriage when he was alive. Often for second homes, the kids from #1 can buy her out too if they can come to terms with #2 as real estate has a set value to use. For O&G, usually it's hard to do this as it's only a teeny tiny part of a bigger field that it's tied within and it would be hard to put a value on mom's interest as the field has all sorts of owners (which she is not one), perhaps in several counties/parishes. If for whatever reason, Medicaid wants a value, you will have to get a landman to run the #'s on it for you. Your attorney can contact one of the big )&G white shoe law firms (like C&M or MonBar) in NOLA to find a landman who does valuations. Will be expensive. You want to avoid this anyways.

So what type of royalty amount are we talking about? If this is a pass through like the 1/32nd of 1/10 of section # 1234 in field # 4567 situation, it won't be much. Dad probably didn't own the well, now did he? So what is the check for and for what period of time?

In other words, you need to see how the checks are being done. Often for production, they only pay when it meets a certain mark. Can be low like $ 10 in a quarter or could be like $ 100 annual before any royalty gets paid. If it's a dry well and produced next to nothing, they can go for ages before a check ever gets issued. Family may not even know of it's existence as it's been decades since production happened. When oil was low, it just wasn't worth dealing with older ones. Prices are high now plus all that fracking, so old wells are being reworked. But I digress, how it gets paid can be amortized over the period of time of the payment for Medicaid. So if mom got $ 360.00 last year, it's $ 30 a month in reportable income for Medicaid. Believe me there is going to be someone within LA Medicaid staff who will know how to deal with this; who understand the uniqueness of LA usufruct laws and how O&G & minerals work. LA like TX has lots of royalties being paid routinely to the elderly. For my mom's TX Medicaid annual renewal form, there is a specific line for reporting O&G royalties, so it's not anything rare. If the royalty payment is modest (I bet it is), it won't affect her Medicaid once it's amortized. But you need a good legal to work with you on this, like a NAELA elder law attorney to take the lead on all this or maybe the estate attorney for dad may have a name for you. Good luck too.

What does your eldercare attorney advise? I'm assuming that you've used some of mom's funds to consult an eldercare attorney in your area who is "up" on Medicaid applications about how to handle this.

Medicaid looks back five years at all assets your mother owned during that period and what became of them. If she's gifted any money to anyone during that period of time? If she's taken assets out of her name in order to avoid losing them? Medicaid will find them, total them all up, and then exempt "X numbers of months" of payment until that money is returned or used up.

You're talking about committing fraud, just so you know.

No you cannot. Don't do something stupid.